Enterprise-wide AML/CTF Risk Assessment Solutions for Gaming and Wagering Businesses

The risk-based approach (RBA) is a key concept in the prevention of money laundering and terrorism financing (ML/TF). It is a principle that financial institutions, gaming and wagering businesses, gatekeeper professions and other regulated entities use to identify and assess, mitigate and manage the ML/TF risks associated with their customers, products, services, channels, business, transactions and geographic footprint.

The risk-based approach involves identifying and assessing the level of risk associated with a particular customer or transaction and then applying appropriate measures to mitigate that risk. This means that financial institutions must take a proportionate and risk-based approach to their anti-money laundering (AML) and counter-terrorist financing (CTF) measures.

For example, a high-risk customer or transaction may require more extensive due diligence and monitoring than a low-risk customer or transaction. This approach helps to ensure that AML/CTF measures are focused on the areas where the risk of money laundering or terrorist financing is highest, rather than applying a one-size-fits-all approach.

The risk-based approach is now a widely accepted standard in AML/CTF regulations and is recommended by international organisations such as the Financial Action Task Force (FATF) and the Wolfsberg Group, an association of global banks which develops frameworks and guidance for the management of financial crime risks.

The risk-based approach presents challenges to many regulated businesses who lack the internal capacity or capability to design, build and implement enterprise-wide money laundering and terrorism financing risk assessments, which is at the heart of the problem that Arctic Intelligence is solving.

Gaming and wagering firms are subject to money laundering laws because they are considered high-risk businesses for money laundering and terrorist financing activities. Gaming, especially online gaming, can be used as a tool for criminals to launder illicit funds by placing bets or making transactions that appear to be legitimate but are actually part of a money laundering scheme.

Criminals often use high-risk businesses, such as gaming firms, to launder their funds because they can easily deposit and withdraw large sums of money, and it can be difficult to trace the origin of the funds. By complying with money laundering laws, gaming firms help to protect themselves and their customers from criminal activity, maintain the integrity of their business operations, and contribute to the overall efforts to combat financial crimes.

Bookmakers and betting agencies are susceptible to money laundering risks due to the large volumes of cash transactions that occur in the industry. 

The money laundering and terrorism financing (ML/TF) risks associated with Bookmakers and Betting Agencies include (but are not limited to):

• Bookmakers and betting agencies handle a lot of cash, which can make it difficult to trace the source of funds and identify suspicious activity

• Bookmakers and betting agencies are required to perform customer due diligence to identify and verify the identity of their customers. However, if they fail to do so, it can create an opportunity for money launderers to use the betting platform for illegal activities

• Money launderers may use multiple accounts to place bets and move funds around. This can make it difficult to track the source of funds and identify suspicious activity

• Bookmakers and betting agencies should have systems in place to monitor transactions for suspicious activity. If they fail to do so, they may miss key indicators of money laundering, such as unusual betting patterns or large, unexplained transactions

• Bookmakers and betting agencies may also have become more attractive to criminals over the past few years as the financial sector has implemented more comprehensive AML/CTF measures, with a focus on cash.

To mitigate money laundering risks Bookmakers and Betting Agencies are required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties is legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Bookmakers and Betting Agencies, if you would like to learn more contact us or book a demo.

Casinos can be susceptible to money laundering due to the high volume of cash transactions and the ability to convert large sums of cash into chips or other gaming instruments, which can then be redeemed for cash or transferred to other accounts.

Casinos are attractive to criminals wanting to launder the proceeds of crime.

Casinos are vulnerable to money laundering activities as many casinos offer services similar to financial institutions, including accounts, foreign exchange, money changing, and electronic funds transfers.

Casinos may also have become more attractive to criminals over the past few years as the financial sector has implemented comprehensive AML/CTF measures.

The money laundering and terrorism financing (ML/TF) risks associated with Casinos include (but are not limited to):

• Criminals may engage in the “structuring” of transactions, meaning the breaking up large transactions into smaller amounts to avoid triggering reporting requirements. For example, an individual may exchange $10,000 in cash for chips, then play a few hands and exchange the chips for cash, repeating this process multiple times to avoid detection
• Criminals may engage in “chip walking”, which involves buying chips with illicit funds and immediately cashing them out, creating the appearance of legitimate gambling activity
• Criminals may rely on the use of intermediaries, such as agents or junket operators, to exchange cash for chips or other gaming instruments, creating a layer of anonymity
• Criminals may engage in the “smurfing” of transactions, which is similar to structuring, and involves breaking up large transactions into smaller amounts, but using multiple individuals to conduct the transactions to further avoid detection.

To mitigate money laundering risks Casinos are required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, and business, environmental, and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties are legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Casinos and our Risk Assessment Platform, allows larger more complex Casino businesses to fully configure the methodology, risk models and control libraries and much more.  If you would like to learn more contact us or book a demo.

Physical gaming venues like racetracks, bingo halls, betting shops, hotels, pubs and clubs that have gaming machines (i.e., pokies or fruit machines etc.) are at high-risk of being used by criminals to launder the proceeds of crime.  This is because these venues typically handle large amounts of cash, and support the conversion of cash into cheques and electronic funds transfers, thereby potentially making it easier for criminals to conceal the source of their illicit funds.

Gaming machine venues may also have become more attractive to criminals over the past few years as the financial sector has implemented more comprehensive AML/CTF measures with a focus on cash.

The money laundering and terrorism financing (ML/TF) risks associated with Physical gaming venues include (but are not limited to):

• Criminals may deposit their illicit funds into gaming machines, play a few games to make it seem like the money was won legitimately, and then cash out the funds as "winnings." This process effectively "cleans" the illicit funds, making it more difficult for law enforcement to trace the funds back to their illegal source
• Criminals may bribe or otherwise coerce employees to assist in the money laundering process, such as by falsifying records or providing insider information.

To mitigate money laundering risks Physical Gaming Venues are required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties are legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Hotels, Pubs and Clubs, if you would like to learn more contact us or book a demo.

Online gambling businesses are high-risk for money laundering as the amount wagered on these websites or platforms often involves large amounts of money being transferred between different individuals and across borders, which provides opportunities for criminals to launder the proceeds of crime.

Online gambling businesses may allow anonymous accounts or accounts with limited identity verification, which makes it easier for criminals to conceal their identities and launder money through the platform.

Online gambling businesses are often established offshore in secrecy havens to minimise or avoid tax, and as a result, may have weak or inadequate anti-money laundering measures in place or be subject to less regulatory scrutiny, allowing an environment where criminals can more easily deposit and withdraw funds without detection.

The money laundering and terrorism financing (ML/TF) risks associated with online gambling businesses include (but are not limited to):

• Online gambling platforms often allow users to remain anonymous or use fake identities, making it easier for criminals to disguise the source of their funds and launder money
• Online gambling platforms often involve large volumes of transactions, which can make it difficult to identify suspicious activity and patterns
• Many online gambling platforms operate in jurisdictions with lax regulations, making it easier for criminals to exploit loopholes and avoid detection
• Online gambling platforms often use complex payment systems, which can make it difficult to trace the origin of funds and detect money laundering
• Online gambling platforms have a global reach, making it easy for criminals to move funds across borders and evade detection.

To mitigate money laundering risks online gambling businesses are required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties are legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Online Gambling, if you would like to learn more contact us or book a demo.

Arctic Intelligence is a multi-award winning, RegTech firm that specialises in audit, risk and compliance software related to financial crime compliance and risk management.

Arctic Intelligence has helped large, medium and small clients in the gaming and wagering sectors to identify and assess their risks and vulnerabilities to financial crime and then design, implement and maintain appropriate and proportionate controls to mitigate and manage these risks.

Arctic has developed three leading cloud-based software solutions that leverage the latest regulatory technology (RegTech) to re-engineer the way in which gaming and wagering organisations manage their financial crime risks.

If you would like to learn more please contact us or request a demo with our team click here.